This week, we bring you the Stock Screen of the week from Validea. On Validea.com, you can screen for stocks using the site’s Guru Stock Screener, which scores stocks based on the fundamental stock selection criteria of legendary investors. The firm’s models are based on investing legends such as Warren Buffett, Peter Lynch, Benjamin Graham, Kenneth Fisher, Martin Zweig, David Dreman, Joel Greenblatt and others.
This week’s screen is based on Validea’s Peter Lynch-based strategy, which looks for stocks trading at a reasonable price relative to earnings growth that also possess strong balance sheets. The model’s criteria are listed below.
- P/E/GROWTH RATIO
- SALES AND P/E RATIO
- EPS GROWTH RATE
- TOTAL DEBT/EQUITY RATIO
- EQUITY/ASSETS RATIO
- RETURN ON ASSETS
- FREE CASH FLOW
- NET CASH POSITION
To view the P/E/G Investor portfolio on Validea, click here.
All of the stocks in the table below meet at least 90% of the criteria listed above. To focus on small caps, we limited the screen to those companies with market caps between $250 million and $1 billion. In addition, we added a maximum P/E/Growth ratio of 1.0 (Lynch loved comparing the stocks valuation to its earning growth rate using the P/E/G ratio) and also added a minimum requirement of at least 25% insider ownership to find companies where management has significant ownership stakes.